* Markets continue to take profit from Dec's long dlrs
* Dollar on track for worst day vs yen in nearly a month
* U.S. pending home sales plunge, weigh on dollar
(Updates prices, adds details)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 5 (Reuters) - The dollar tumbled against the
yen on Tuesday, pressured by a steep drop in U.S. pending home
sales and moves by investors to reduce December's bullish bets
on the greenback before the U.S. jobs report later this week.
The euro, however, fell from three-week highs versus the
dollar in choppy technical trading. Traders said the pair's
inability to get past $1.4450 in the New York session prompted
some short-covering in the dollar.
Data showing pending sales of previously-owned U.S. homes
fell more than expected in November weighed on the dollar
versus the yen and cast doubt on the view the housing market
has stabilized. For details, see [].
"The dollar ... is acting in a more traditional fashion and
weakening on poor U.S. data," said Jacob Oubina, senior
currency strategist, at Forex.com in Bedminster, New Jersey.
"We think that's going to be a theme in 2010. We've seen it for
about a month and a half now, and we're even seeing it today on
second-tier data rather than just on payrolls and retail
sales."
The Labor Department reports December non-farm payrolls on
Friday and the figure will help determine the dollar's
near-term direction.
The November jobs report prompted some economists to say
employment growth started last month and the U.S. Federal
Reserve could hike rates sooner rather than later -- a move
that would boost the value of dollar-based assets.
For the December report, the median forecast of analysts
polled by Reuters is for a decline of 8,000, with estimates
ranging widely from a loss of 80,000 jobs to a gain of 59,000.
For more, see []
With uncertainty surrounding Friday's number, the U.S.
currency reversed last week's gains, unable to take advantage
of strong U.S. manufacturing data on Monday.
Some analysts said investors capitalized on the robust U.S.
data to buy into riskier assets, using the dollar to finance
these trades.
Others said trades were based on position adjustments and
profit-taking after the dollar posted strong gains in
December.
"The fact of the matter is that investors have been very
short most of the major currencies except the dollar, and I
think they're buying them back ahead of the the key event risk,
which is the non-farm payrolls report," said Marc Chandler,
global head of currency strategy at Brown Brothers Harriman in
New York.
Data from the Commodity Futures Trading Commission released
on Monday showed an increase in long-dollar positions for a
second straight week to Dec. 29. For the fourth week running,
the non-commercial position was short euros. For details
see[].
"There's also some thought that the dollar's year-end move
was too far, too fast, so people are booking some profits.
There's not a lot of conviction in those long dollars." said
Chandler.
Still, analysts said risk appetite remains a driver in the
currency market and should not be totally disregarded. The
theme, however, stayed in the background in December as
investors priced in the onset of higher U.S. interest rates in
mid-2010 amid upbeat economic data.
In midday New York trading, the euro <EUR=> was down 0.1
percent at $1.4392, having climbed to around $1.4483 earlier in
the day to hit its strongest since Dec 17.
The dollar <JPY=> fell 1.1 percent to 91.58 yen, on track
for its biggest one-day percentage loss in nearly a month. It
fell to 91.26 yen, its lowest in about two weeks.
The latest CFTC data showed that large speculators have
flipped to long dollars versus the yen last week for the first
time since June, leaving the currency pair vulnerable to a
modest correction.
The ICE Futures' dollar index <.DXY>, which tracks the
dollar's performance against six major currencies, was little
changed at 77.484.
(Additional reporting by Steven C. Johnson; Editing by
Andrew Hay)
